Tuesday 12 December 2017

Shares tumble again on debt fears

Allied Irish Banks had lost 6.76pc to reach 33c. Photo: Bloomberg News
Allied Irish Banks had lost 6.76pc to reach 33c. Photo: Bloomberg News
Peter Flanagan

Peter Flanagan

IRISH shares continued to tumble as the doubts about Ireland's ability to repay its sovereign debt overtook the ISEQ.

The ISEQ Overall Index eventually closed at 2681.04, down 1.27pc, or 34.58 points on the day. Financials were again hammered, as they remained tethered to the Irish debt crisis.

The ongoing crisis surrounding Irish sovereign debt continued to dominate the market, with comments from European Commission President Jose Manuel Borroso suggesting the EU would step in to bail out Ireland if needed, doing little to stem the tide of capital leaving Irish debt.

Bond yields stabilised slightly after Wednesday's bloodbath, but they remained high throughout the day, with 10-year debt hovering around the 9pc mark, while the cost of credit default swaps on some bonds issued by Irish banks hit distressed levels.

By the closing bell in Dublin, Allied Irish Banks had lost 6.76pc to reach 33c, Bank of Ireland had fallen 7.91pc to hit 38c and Irish Life and Permanent had been smashed again, down 10.25pc to 82c.

The banks were not the only stocks to suffer on what was a bad day for equities across the board.

Construction giant CRH dropped 2.64pc to close at €13.30, while mining company Kenmare Resources shipped 8.33pc, in part because of an ongoing court case involving a former Kenmare executive.

The winners on the day were difficult to find but there were some. Pharmaceutical company Elan added 3.27pc to close at €4.11 following a surge in the stock on the Nasdaq on Wednesday night, while recruitment company CPL Resources jumped 4pc after announcing a small acquisition.

Worries about Ireland and a possible contagion into the rest of Europe continued to weigh on investor sentiment, with national benchmark indexes falling in 14 of the 18 markets in Western Europe. The French CAC 40 slipped 0.5pc and the FTSE fell slightly. Germany's DAX index was essentially flat, while the composite Stoxx 600 was little changed.

"Investors remain very worried about the situation in Ireland," said Christian Parisot, a Paris-based strategist at Aurel BGC. "Ireland's parliament is still involved in a tough debate regarding the austerity programme needed to rein in the budget deficit."

Royal Bank of Scotland, Britain's biggest government-owned lender, slumped 2.7pc. RBS dropped because the bank has €42.2bn of Irish debt, according to hedge fund manager MFGlobal Securities

ICAP, the world's largest inter-dealer broker, declined 4.1pc after Credit Suisse cut its recommendation on the shares to "neutral" from "outperform."

In Spain, Telefonica, the parent of mobile operator O2, slipped 1.8pc after third quarter earnings missed estimates.

Irish Independent

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